The Association Between Corporate Dividends and Current Cost Disclosures

An attempt is made to examine empirically competing hypotheses regarding the association between current cost data and dividend decisions. Three years of current cost data for 325 US firms are tested. The sample consists of all firms listed in Business Week's 1981 survey of inflation accounting...

Full description

Saved in:
Bibliographic Details
Published in:Journal of business finance & accounting 1988-06, Vol.15 (2), p.215-230
Main Author: Dharan, Bala G.
Format: Article
Language:English
Subjects:
Accounting standards
Cost accounting
Current cost accounting
Disclosure
Dividends
FASB statements
Hypotheses
Regression analysis
Statistical analysis
Stock returns
Studies
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:An attempt is made to examine empirically competing hypotheses regarding the association between current cost data and dividend decisions. Three years of current cost data for 325 US firms are tested. The sample consists of all firms listed in Business Week's 1981 survey of inflation accounting data and listed on the July 1984 COMPUSTAT tape, except for 6 firms that changed their fiscal years between 1979 and 1983. The overall findings suggest that current cost data have no incremental explanatory power over dividend decisions; this is consistent with a rejection of the capital maintenance hypothesis. The results also are consistent with a rejection of the investment opportunity model. In general, the target payout and partial adjustment models are strongly supported by the results, although there is some indication of learning regarding the use of current cost data for corporate dividend decisions when 1983 results are compared to 1981 results.
ISSN:0306-686X
1468-5957
DOI:10.1111/j.1468-5957.1988.tb00131.x